7 Tips to Improve Your Property Management Expenses and Financials
The accounting, purchasing, and budgeting processes in property management don’t have to be painful.
Managing the complexities of a large or small portfolio of apartments and other lease properties requires a keen eye and efficient processes. And as difficult and cumbersome as it may sound to blend all the moving parts of property management into a tidy, resourceful financial package, today’s software solutions can offer great relief.
Handling property management financials and expenses
By using a software solution to help stay on top of all the pieces, the front office can more easily identify how money flows in and out of a portfolio. And tracking accounts through integration with property management software will lead to a better understanding of the financial health of any portfolio, from the past and to the future.
Here are 7 ways your property management company can improve its accounting practices:
1. Establish a spend management program
Spend management is the backbone of effective spending for any company. The framework of best buying practices supports the company’s philosophy and establishes controls on spending that fit within prescribed budgets for any part of the operation, whether maintenance items like flooring or notepads for the front office. Through creation of a corporate spending policy, employees are held accountable for their purchases, which in turn reduces maverick spending site wide.
Managing eProcurement, payables processing, and invoice management processes in one centralized online solution is essential for any company to stay within a budget at any time of the year.
2. Select one accounting process
The size of the operation may determine how the company records income and expenses. While larger companies often utilize the accrual method, smaller operations may find it easier to use a cash accounting method. Expenses and income are logged when they drop into the company’s account. This provides visibility into the actual real-time operation of the business, especially with cash flow.
3. Anticipate expenses and income
By identifying likely expenses and income, and forecasting based on this information, owners can predict their next moves and isolating problems before they happen. A budgeting system that offers an integrated forecasting tool can be a budgeter’s best friend in the long run.
Forecasting software enables staff to analyze trends, spot problems and see key performance indicators with detailed or summary level reports. Snapshots of 12-month periods, long-term rolling forecasts and more can be viewed quickly and easily.
4. Budget for the year-round changes
The time of year, events or business cycles impact many businesses, regardless of whether they are anticipated. The seasons influence apartment operations, especially when it comes to budgeting for utilities. Benchmarking and tracking utility performance throughout the year, for example, is helpful to establish budgets for water, electric and gas.
Reviewing historical billing in current and past years is helpful for not only establishing longer term budgets but also forecasting only a couple of months out of the year.
5. Utilize and share data
Establishing spend management practices, accrual procedures, and forecasting platforms are essential components of good accounting. But if key people aren’t in the loop, the accounting process hits a bump. It’s critical that accounting reports and data are available for immediate sharing. An electronic accounting system is a valuable tool that enables easy access of reports and important information for key stakeholders to better formulate the budget.
6. Create uniform spending processes
A company that doesn’t have a standardized spending process with purchasing approvals established may be leaving money on the table. Without uniformity in spending, a property management company may pay different prices for the same items throughout its portfolio. Also, if every purchase requires lengthy analysis, time and money are probably being wasted.
Standardization streamlines spending and adds consistency to purchasing. Best qualified vendors are established and used repeatedly to ensure a portfolio gets not only the best price but attention when it matters most. The bottom line is that standardized spending creates efficiencies for any-sized portfolio, whether it’s new construction or a retrofit.
7. Take accounting digital
Those accounting platforms are software based may be incompatible with other pieces of software used in the property management portfolio. A web-based, integrated accounting system neatly packages all functions into one work solution. Scanning receipts, posting expenses, and creating deposits can be done with a few clicks. Plus, a digital accounting solution is environmentally friendly.
With a few simple practices, property management companies can stay atop the money flowing in and out of their portfolios and help create a healthier business.